Sep 11, 2008

India - How not to choose a Business School

India’s demographics and a rapidly changing socio-economic profile have turned into a big opportunity for the creation of an education industry, especially for professional skills. Sensing a sound profit opportunity, many education entrepreneurs have entered the sector, often with the prime motive of making money. Nothing wrong with it—and about time, actually—but those of you looking to select a business school ought to know how some parts of this business work.

Take, for instance, one business school with some 10 “campuses” across India. It has a simple strategy. Woo potential students with a huge number of advertisements—often full-page newspaper ads—that routinely take licence with the truth; give admission to whoever applies provided they are willing to pay the hefty fees; and keep operational costs low, especially by not investing on faculty.The students come in droves, based on ads that talk up placements, a faculty that looks great on paper and state-of-the-art infrastructure. A public relations company engaged by the B-school is also well networked with a slew of journalists at both national and regional dailies who, in turn, regularly generate positive reports about the institution, especially in regional newspapers that reach the principal target: students from small towns. Occasionally, as it happened in 2008, a survey firm and a television channel helped out, pitching in with friendly rankings, putting the institute among the top 10 B-schools in India.Another way it attracts students is the opportunity for global exposure. Again, sounds great on paper unless, as in this case, it usually means foreign junkets and exposure to buildings and sights—not necessarily full-blown university courses or overseas companies. After all, any self-respecting travel agency can arrange for such “global” exposure. A true global exposure for a B-school student ought to be in the form of honest exchange programmes where a student is sent to a foreign B-school for at least one full term, allowing the student to systematically attend classes there and interact, in a sustained manner, with legitimate faculty and other international students.As to the institute’s Indian faculty, most of them are “visiting”, or fresh “graduates” from the same B-school, paid starting salaries of about Rs15,000 a month. A virtuous circle, if you will, that also helps with all those wonderful “placement” figures in the institute’s ads. It doesn’t mean companies haven’t hired anyone from there. A booming Indian economy has meant that students of the school have indeed been placed, including some in foreign jobs, though this accounts for half the graduating class. Often, some of these jobs are entry-level sales jobs with salaries that don’t come close to what a real master’s in business administration might get from a second-tier school.Because this B-school hasn’t asked to be recognized by any government body—a route that in itself isn’t bad given all the issues this column has raised about the regulator, the All India Council for Technical Education—and is essentially self-regulated, there is no control over how many students it takes, what it teaches and its evaluations.So, anybody who is willing to pay the stiff fee is admitted, irrespective of whether the student has even cleared the undergraduate or qualifying exam. Like rolling placements, it has rolling admissions even though, officially, the institute admits students only twice a year. The school gives degrees from a European “university” which is equally interesting and has a student intake of about 60. And, it would be very interesting to find out if this Indian B-school has a major stake in that European “university”.By my estimate, the total number of students in all 10 campuses could be about 30,000, with annual revenue of about Rs1,200 crore. If some of my math adds up, we are talking about Rs600 crore to the bottom line.Like many Indian B-schools, this one is also run by a “not-for-profit” trust. So what happens to all this money? The school has related entities that charge the school for different activities including one firm that bills the parent for renting out the same teachers that act as faculty. An “in-house” advertising firm that develops the ads, in turn, takes a commission from both the B-school and from various publications that run the ads. And the money flows out to the education entrepreneurs behind the school.In a slowing economy, it will take a very long time for a student who has invested about Rs12 lakh in all to complete this school’s two-year course to earn that money back. All I can say is, buyer beware. And add that a complicit media needs to look at itself and ask whether it is helping mislead an entire generation of young Indians by going along for the ad money ride that this institute offers newspaper owners.Editor’s note: Multiple attempts by Mint to discuss these and other related issues with the New Delhi-based business school (IIPM) that the columnist refers to weren’t successful, despite repeated promises by the school’s spokesperson, as well as its owner, to meet Mint editors and education reporters.